Chelsea fired manager Carlo Ancelotti on Sunday, after a 1-0 loss at Everton completed a season which had "fallen short of expectations", the club said in a statement.
"Chelsea Football Club can confirm that Carlo Ancelotti parted company with the club today," a statement on Chelsea's website read.
"The owner and board would like to thank Carlo for his contribution and achievements since taking over as manager in July 2009, which included winning the Double for the first time in the club's history.
"However, this season's performances have fallen short of expectations and the club feels the time is right to make this change ahead of next season's preparations.
"Chelsea's long-term football objectives and ambitions remain unchanged and we will now be concentrating all our efforts on identifying a new manager."
Former AC Milan manager Ancelotti had been a popular figure at Stamford Bridge and guided the club to the double in his first season.
However, he paid the ultimate price for a mid-season slump which witnessed Chelsea's worst run of league form in nearly 15 years that ultimately wrecked their chances of defending the title.
Ancelotti was the sixth manager of Chelsea owner Roman Abramovich's eight-year reign.
The respected Italian had been hired with the brief of turning Chelsea into European champions but under Ancelotti the Blues exited against Inter Milan in the last 16 last year before being beaten by Manchester United in this year's quarter-finals.
Ancelotti's authority had been undermined by the abrupt dismissal of his assistant Ray Wilkins in November, a dismissal which was followed by a disastrous form slump.
British media reported that Ancelotti, who had a year left to run on his contract, was notified of his dismissal by chief executive Ron Gourlay at Goodison Park following Sunday's defeat.
In his post-match press conference, Ancelotti had said he expected to meet Chelsea bosses next week to discuss his future.
"I am now on holiday - but I am not sure how long my holiday will be!" he said. "We haven't arranged any meeting but I think in the next week, now the season is finished, the club can address my job and they will take a decision.
"I have to wait and see what happens.
"I don't have to say anything to the club - they can judge me on my job for two years."
British bookmakers William Hill immediately installed Andre Villas Boas -- who on Sunday clinched a League, Cup, and Europa League treble with Porto -- as favourite to replace Ancelotti.
Former Chelsea managers Guus Hiddink and Jose Mourinho were quoted at 7/2 followed by Harry Redknapp, Pep Guardiola and Marco Van Basten.
Hiddink, who guided Chelsea to the FA Cup in 2009 during a short stint as caretaker following the dismissal of Brazilian Luiz Felipe Scolari, is currently coaching Turkey.
The 64-year-old Dutchman said in a newspaper column on Sunday he had continued to advise Chelsea since his departure.
"It works well with Chelsea," Hiddink wrote in De Telegraaf. "Since I left two years ago I've been advising the club on things concerning the squad.
"Sometimes I become a sounding board. It costs me very little time and I can combine it well with my position with Turkey.
"There is no conflict at all."